Shares in Wienerberger experienced a sharp decline on Thursday following the company’s revision of its projections for its end markets in Europe. It seems that demand in these markets is turning out to be weaker than initially anticipated.
As of 1027 GMT, shares had dropped by 9.5% to EUR26.56.
The Austrian building-materials company now expects a more significant decrease in activity in the new build, renovation, and infrastructure markets in Europe. In contrast, its forecasts for North America remain unchanged. Wienerberger’s updated outlook is now pointing to double-digit declines in activity across the three segments in Europe. Factors such as inflation, higher financing costs, and more restrictive mortgage lending are negatively impacting its end markets.
Despite the persistent pressure on new-housing markets, Stifel analysts Tobias Woerner and Augustin Cendre believe that the interest-rate cycle will eventually turn as inflation subsides. In a research note, they state that the company estimates its operating earnings before interest taxes depreciation and amortization for the full year to be between 800 million and 820 million euros ($877.9 million-$899.8 million).
While Wienerberger acknowledges the challenging outlook, Stifel remains confident that the company’s operating earnings guidance is on track.
In the second quarter, Wienerberger reported that its operating Ebitda decreased by 23% to EUR245.4 million, with revenue down by 19% to EUR1.15 billion.
